The bleak picture came amid efforts this weekend to secure a basic 'core' agreement on British coal supplies to the power generators in time for a April 1 deadline, when the core contracts expire. Ministers expect to know by tomorrow whether a deal - essential if the Government is to produce its long-awaited Energy White Paper before Easter - can be struck.
Ministers are still hopeful that a core deal can be done - and that this would then pave the way for extra coal sales, subsidised to the tune of around pounds 500m, which they say could reprieve some pits over five years. One minister insisted yesterday that the Government had not despaired of possible extra sales of around 12m tonnes eventually being agreed - with perhaps a dozen of the 31 threatened pits being reprieved. Ministers are also considering changes in mines legislation to allow individual pits to be sold off as a means of saving extra mining jobs. At present legislation restricts the number of miners than can work in privately-owned pits.
But senior government sources also acknowledged that if a core contract could not be agreed then a White Paper would be ruled out before the Easter Recess. That means that Michael Heseltine, President of the Board of Trade, would have to come to an already restive Commons with little more than a statement on the negotiating deadlock to show for the six months' review that followed last year's pit closure announcement.
A big operation has already got underway by government business managers to damp down expectations of the scale of any U- turn on pit closures.
However, senior coal industry sources point out that the core coal contracts now under negotiation between British Coal and the electricity industry envisage a sharp drop in April 1994 to 30m tonnes, from 40m tonnes in the coming year and 65m tonnes at present. The sources believe that this drop - coupled with intense pressure to increase productivity - means that none of the threatened pits have a long-term future.
Electricity industry sources blamed the Government for the current stalemate on the core contracts. At least one of the generators wants confirmation that any contracts with British Coal will be honoured by successor companies, should British Coal be broken up. The Government is understood to have refused that guarantee.
At the same time, regional electricity companies, which must buy the electricity generated from the coal, are now thought to have secured guarantees that they will retain their monopolies over small customers at least until 1998.
National Power and PowerGen have a powerful bargaining tool in the form of coal stocks of around 40m tonnes. According to one of the generators: 'We will be willing to take extra coal at the right price but you must bear in mind our stocks. It is near the limit of our capacity. There is a year's supply.' British Coal also has stocks above ground which it has yet to sell.
At the same time coal industry insiders say that no serious world- class player has yet made an approach to buy any of the coal mines. There have been repeated suggestions that private companies might step in to take over mines no longer needed by British Coal; but so far serious interest has been largely confined to small UK companies with open-cast and not deep mining experience.
British Coal is willing to sell or license mines earmarked for
closure but not if the buyer wants to make a short-term profit at the expense of taking business from British Coal's other viable mines.Reuse content